What Makes a Great CEO?

What factors predict high CEO approval? This study provides a new statistical analysis of Glassdoor CEO approval ratings, a unique measure of CEO quality from the employees’ perspective. We show the statistical impact of company culture, CEO characteristics and company financial performance on CEO approval ratings for a sample of large, publicly traded companies in the United States. Key findings include:

• CEO pay matters: Higher CEO compensation is statistically linked to lower CEO approval ratings on average. However, that effect is lessened when company culture is better.

• Company culture matters: We find that a satisfied workforce is an essential driver of CEO approval ratings on Glassdoor. Three aspects of company culture matter most:

1. Opinion of senior leadership;
2. View of career opportunities; and
3. Quality of compensation and benefits packages.

• Work-life balance is an exception: Surprisingly, one aspect of company culture is negatively related to CEO approval ratings: Work-life balance. Low satisfaction with work-life balance predicts high CEO approval. Although many workers value work-life balance, they appear willing to sacrifice it in exchange for great CEO leadership.

• Founders matter: CEOs who are also their company’s founder predicts significantly higher CEO approval ratings than being an externally hired or internally promoted CEO.

• Performance matters: CEOs of more profitable companies receive higher approval ratings on Glassdoor, even after statistically controlling for the impact of other factors such as industry and company size.

• Gender and other personal characteristics matter less: Gender, age and education of CEOs have little effect on CEO approval ratings once other factors are accounted for.

To learn more, read the full study, What Makes a Great CEO?, and the press release summarizing the research. For employers and CEOs, learn more in the new eBook, Glassdoor’s Guide to Great Leadership. To receive new research and regular labor market updates, subscribe to Glassdoor Economic Research.